Today’s tickers: CQB, PSS, SWY, GE, EWC, SOLF, AZO
CQB – It’s been a slippery slope for Chiquita International, the banana producer and importer – a fact written all over its 52% implied volatility reading. Late last week, European Union trust-busters announced a series of raids on exotic fruit importers including Chiquita as part of a probe into alleged price-fixing activity on the European market. Today’s 8% boon for shares to $20.30 – on track for a new 52-week high – looks like the upshot of news that the company could benefit from a WTO ruling against EU banana import tariffs. Option traders, meanwhile, are taking the share price action with cool aplomb this afternoon, with most of the early volume caught up in fresh buying in February 17.50 puts – possibly indicating an expectation for Chiquita share prices to come off their current highs later this winter. This activity may be occurring as part of bear put spread activity involving the sale of puts at the February 15 strike. By buying the upper strike at $0.95 and writing the lower at $0.40, the trader opens the transaction with a debit in expectation of controlled downside price movement in the underlying price.
PSS - Our option scanners detected a 7-fold increase in option activity in Collective Brands, Inc., apparel retail company best known for its Payless ShoeSource chain of discount shoe stores, ahead of today’s Q3 earnings report. Collective Brands also owns shoe company Stride Ride, while its Collective Licensing International division controls youth/skateboard culture brands Airwalk, Vision Street Wear and Skate Attack. The campaign of acquisitions for the Topeka, Kansas-based company has left share-price attrition in its wake, and today’s price of $15.21 represents a .78% decline on the session, a steady 52% decline over the past year, and a fresh 52-week low. The 20% hike in implied volatility our scanners detected at the start of the session is consistent with a company on the verge of earnings, and with the implied vol reading now approaching 80% it looks like option traders know full well that they’re dealing with a stock with plenty of room to move.
A look at the option positioning today suggests that option traders may be looking for Collective Brands to clear a collective hurdle, given the degree of buying we observed in December 15 calls at $1.40 apiece. Given current premiums, the shoe retailer’s share price would have to recover some 8% in the next two weeks just to break even.
